THIS time of year Australians across the country are filing their tax returns online or sending a year's worth of paperwork for their accountant to lodge.
Though essential, filing your tax return is often a tedious chore.
Thankfully, for many, there is a reward that awaits them - a tax refund.
According to the Australian Tax Office, the average Australian taxpayer received a return of about $2000 after the 2012-13 financial year.
While some people may consider their tax refund a mid-year bonus, and spend the cash on an exuberant purchase or a luxurious holiday, it often pays to spend the money more wisely.
I would recommend that people use their tax refund this year as an opportunity to plan for the future - whether to grow their savings or pay off debts.
To help, I've come up with the following top tips:
Take it to the bank: The simplest way to use your tax refund is by transferring it to a high interest savings account. Whether you are saving up for a new car or a deposit to buy your first house, this lump sum injection will help speed up the process. Leave the money untouched and watch the interest add up.
Pay off and cancel your credit card: According to Mortgage Choice's inaugural 2014 Money Survey, 35 per cent of Australians with a credit card owe $5000 or more. Not only are the interest rates on credit cards notoriously high, but many people get stuck using a credit card because they can't break the cycle as interest continues to accrue.
Make a voluntary HECS-HELP contribution: Young Australians who have secured a graduate job or are still in their first few years of work may not yet earn enough to start paying off their HECS debt. While compulsory payments won't kick in until you earn $53,345 or above in the 2014-15 income year, you can make a voluntary lump sum payment towards the debt at any time.
Top up your mortgage: If you are in the middle of your financial life cycle, chances are your biggest debt is a mortgage. Use your tax refund as an opportunity to make a voluntary repayment on your mortgage, in addition to your usual payments. If you do this each year, you may be able to pay off your mortgage early.
Inject it into super: Tax refunds are a great opportunity to grow your superannuation.
Phone Richard Windeyer on 1800 01 LOAN.